Budget 2020 was announced on Tuesday, 18 February 2020. Deputy Prime Minister and Finance Minister, Mr Heng Swee Keat went into immediate concerns hovering over Singapore economy.
Budget 2020 sets aside SS$5.6 billion to help firms, workers and households amid the Covid-19 outbreak, with a focus on the future, from economic transformation to climate change.
Taking into consideration that the Singapore economy faces considerable uncertainty in the coming year with recovery derailed by the uncertainty brought forth by the Covid-19 outbreak, a Stabilisation and Support Package of both economy-wide and sector-specific measures was introduced. This includes a 25% corporate income tax rebate, capped at $15,000 per company to help firms with cash flow. The government will also enhance tax treatments under the corporate tax system for a year, allowing businesses to write down their expenditure in plant & machinery, renovation & refurbishment in year of assessment 2021.
Rent and tax reliefs, such as property tax rebates, ranging from 10% to 30% will be given out to the tourism, aviation, retail, food services, and point-to-point transport services sectors.
The National Environment Agency (NEA) will provide a full month rental waiver to all stall-holders in NEA-managed hawker centres and markets. For other Government-owned or managed facilities, the respective government agencies such as Housing and Development Board (HDB), People's Association (PA), Singapore Land Authority (SLA), Jurong Town Corporation (JTC), Urban Redevelopment Authority (URA), Singapore Tourism Board (STB), NParks and Sentosa Development Corporation (SDC) will provide half a month’s worth of rental waivers to eligible commercial tenants/ lessees who are on leases not exceeding three years, and do not pay Property Tax. Eligible tenants/ lessees may include those providing commercial accommodation, retail, food and beverages, recreation, entertainment, healthcare and other services.
While supporting businesses, there are also plans to manage the foreign worker policy. In a bid to encourage firms to hire skilled locals, the dependency ratio ceilings (DRC) for services sector was reduced to 38% from 40% starting 1 January 2020. The DRC will be further reduced to 35% on 1 January 2021. The S-Pass sub-dependency ratio ceiling (Sub-DRC) will be lowered for the construction, petroleum and petrochemical manufacturers, and marine shipyard sectors, from the current 20% to 18% on 1 January 2021, and again to 15% on 1 January 2023.
Goods and Services Tax (GST) will remain at 7% in 2021. The earlier-announced 2% GST tax hike will not happen in 2021 but will still be needed by 2025.
The overall deficit of Budget 2020 is estimated at S$10.9 billion or 2.1 per cent of GDP, larger than any actual deficit incurred previously.